How to Estimate your Project Effectively

Business owners like to know their project's time and budget estimates in advance. But one can hardly answer these questions right away: there are a number of critical factors that vary from application to application.

Let's consider this analogy. When you go to a construction company with the request "How much will the house cost?," you will receive one thousand clarifications, such as the type of house structure, total area, number of rooms, exterior and interior materials, design projects or model drafts, etc. In other words, even the shape you want your window - a square or a triangular - will affect the final cost, so one can only name the price after all the points are clear.

This situation is similar to startup development. A structural estimation of time and financial costs is key to successful implementation because it results from a fully formed and, most importantly, a unified vision of project details by both the technical team and the client.

There are two main types of cost estimation:

1. Approximate - is used to determine the estimated project cost with a fairly high margin of error. With its help, the client knows whether the application development is in line with their budget, and whether it is worth contracting the development company.
2. Accurate - is drawn up after signing the contract, taking into account all the project details, including its goals, a full list of functional capabilities, time costs, involved specialists, inherent risks, etc.

In this article, we want to discuss Owlab's estimation process in more detail.

Why Startups Need a Rough Estimate

In app development, whether you're building a startup from scratch or growing your business to stay competitive, understanding project costs and timing is critical when making strategic decisions. However, to get an accurate estimate, the client needs to know whether they are ready to collaborate with the development company on financial issues. For this, one should estimate startup costs for business. This amount is provided within two days and shows whether your application is a solution for, say, 10.000 USD, or 100.000 USD, or it requires funding and resources on a par with the current Facebook.

At the very first stage of interaction, when the client contacts the company with a request, a rough estimate of startup is used. However, its accuracy is relatively low (25% to 70% of the real value). This error is because a detailed calculation is practically impossible due to the lack of clear information about the future project.

How can a rough estimate serve startups? To determine whether a customer has enough budget to implement the project and if the development company is suitable, they can request a rough estimate. If the answer is yes, the parties sign a contract and the discovery phase of the project begins. This step results in a technical assignment with comprehensive information about the future product, real terms, and costs.

Stages of a Rough Cost Estimate for a Startup

Even though each project is different, there are common variables like the type of mobile application development, required functionality (registration, push-notifications, etc.), and project complexity. Understanding them is key to estimating costs.

An approximate estimate can be calculated using two scenarios:

• The client provides a technical assignment, page layouts, or indicates a third-party application in the image, and likeness of which software engineers should develop the product.
• The customer specifies a list of functions and main features that the future solution should have.

After receiving the data, the development company breaks down the application's functionality into separate parts, and estimates the time required to implement each of them. The minimum amount of work is taken into account.

Our experts, drawing on their mobile and web development experience, will offer the best solutions for the requirements. The client receives recommendations on the optimal technological stack (possible languages, frameworks, and libraries) for the server and external interfaces.

At this stage, we won't go into details. A ballpark estimate is just a sketch, which is the first step towards fruitful collaboration.

What is a detailed assessment? Let's see.

Detailed Estimate - the Next Step in Project Evaluation

A detailed assessment allows you to create successful products on time and without the risk of a project freeze due to funding. It provides complete transparency of all organizational and technical issues for both the technical team and the client.

After calculating a rough estimate and signing a contract, we proceed to the discovery phase:

1. Information gathering and business analysis. Our specialists communicate with stakeholders from the client's side to identify the high-level product idea, the company's business goals, understand the market and competitors, and obtain available materials. These insights allow our team to understand the project needs and requirements.
2. Requirement analysis. We assemble a basic team to review the information received, prepare clarifying questions (if necessary), and form a product vision for the customer's approval. At this stage, we determine the scope of work. This analysis involves specialists such as a technical executive, project manager, developers, and sometimes a designer.
3. Creating high-level architecture, design prototypes, and technology stack.
4. Determining the project's time and cost. We break down the teams, split the workload into sprints, and draw up a roadmap. Based on all the data, we make an accurate estimate of the development cost.

As a result of the discovery phase in software development, the client receives a technical task document containing all project data, including implementation methods, page layouts, the necessary tools, and a detailed estimate of the project cost.

What Does a Detailed Estimate Take into Account?

Considering several factors to estimate startup costs for a small business is helpful before getting started. Those that are key include:

• The size. This value is determined by the number of feature pages, as well as the estimated user base. A small application usually has between 10 and 25 screens, a medium application - between 25 and 40, and a large application - over 40. A product with many pages and potentially high loads should be optimized and tested more thoroughly, which will affect the cost.
• Functionality. The more features you add to an application, the more hours it will take to design, develop, test, and deploy, and, therefore, the higher the cost. We always offer our clients an MVP at the initial stage: a product with only vital market functionality. This allows you to get to market faster, test your idea in practice, and then scale gradually with each iteration.
• Technologies. The same product can be created using different technology stacks. Some of them are more suitable than others. Your tech team will suggest the best option based on your business goals, budgets, and product features. In mobile development, the stack and cost are primarily affected by the application type: native, cross-platform, or hybrid. Complex technologies, such as blockchain, machine learning, IoT, etc., also increase the project estimate.
• UI|UX design

  . The user interface is much more than just the look of the application. These are technical and visual solutions to simplify interaction with the product while optimizing it for the perfect user experience and business goals achievement. The complexity of UI|UX design affects the cost.

• Platforms. The app budget is directly dependent on the deployment platform and its characteristics. For example, if you want to build a product like Facebook, you will need Android, iOS, and Windows development. Multi-platform solutions are more expensive because they support various operating systems, middleware, and databases.
• Third-party solutions. In most cases, when it comes to creating software products, reinventing the wheel is unnecessary and costly. For example, one can implement a payment or SMS gateway from scratch, but this approach is unjustified for most projects since it entails significant time and cost spendings. There are enough ready-made solutions from trusted service providers on the market, so if a third-party software or library is needed to implement a project, we include them in the estimate.
• Team. The number and level of specialists working on the project will influence the project cost formation.
• Risks. Each project is fraught with certain risks, both internal and related to external circumstances (one example is the world's coronavirus epidemic). The project manager's job is to define them and propose strategies to eliminate or mitigate their impact on the product.

Reasons for Choosing Owlab?

Owlab is a trusted technical partner for customers. We always adhere to transparent relations and offer solutions based on your interests and the best strategies to achieve your business goals. Our specialists work with advanced technologies and tools, including blockchain, IoT, and machine learning, to create successful and innovative products of any complexity.

Have an idea you want to discuss? Contact us to talk through the details and estimate your software development costs.